UHV lines as Shanxi looks to export electricity instead of coal

2009-02-26
by Proactive Investors Beijing bureau

Shanxi, China’s largest coal producing province, plans to invest RMB100bn in a huge project that will include 25 mine-mouth coal power stations and three more ultra-high-voltage (UHV) power lines before 2012. The new power stations will burn an extra 50m tonnes of coal per year. China burned an estimated 2.74bn tonnes of coal in 2008.

While domestic coal has lost competitiveness, mature UHV lines would allow Shanxi to export electricity instead of its coal.

UHV, defined as a voltage of at least 1,000 kilovolts alternating current or 800 kilovolts direct current, is designed to deliver large volumes of power over long distances with lower power losses than traditional lines. The new technologies are seeing China relocate its power production closer to coal sources.

Due to bottlenecks in transportation, particularly in China’s rail system, the price of coal produced in Shanxi doubles when shipped to the industrial centres around Guangzhou in the South and Shanghai in the East.

As the international coal price has fallen, Australian coal is now significantly cheaper in southern China’s Guangzhou province than the Chinese equivalent. The country’s six major power generators have begun buying coal from overseas markets following the breakdown of their price negotiations with domestic coal miners earlier this year.

Shares of Henan Pinggao Electric Co.(SH:600312), a leading producer of high-voltage power switches, advanced 5.83 percent.